MFA Mortgage Hopes to Sell Assets to Improve Leverage

13 March 2008

Author: admin Posted under Mortgage

In order to reduce their debt-to-equity leverage, MFA Mortgage Investments Inc is planning to sell assets. The decision comes in the wake of the current financial crisis in the credit industry.

MFA has actually sold approximately $1 billion in mortgage-backed securities. They have also terminated several repurchase agreements and associated interest rate swap agreements worth $525 million at a cost of about $31 million cash. In case of further future margin calls, MFA has a cash balance amounting to $348 million and $19 million MBS that are yet to be backed by an agency. With its decision to sell, the company has successfully improved their credit conditions although they are still expecting these conditions to tighten.

With the foreclosure crisis playing a major role in the present financial crisis, it is not surprising that companies such as MFA Mortgage are protecting themselves. Many lenders and investment companies have actually filed for bankruptcy in the past year because of their inability to manage the losses they incurred when the crisis in the subprime mortgage industry hit. To date, over two million homes have entered some stage of foreclosures in the past two years and the end is yet to come.

Although home sales have declined because of the mortgage crisis and recession fears, there are still many buyers who are taking advantage of the opportunities offered by foreclosure homes. These buyers only need to scour the market for hot leads and usually accomplish this task by subscribing to foreclosure listings offered by brokers like Foreclosure Support.

First time buyers also consider the purchase of these foreclosed properties as practical especially in these hard times. They enjoy great savings as well as instant equity. And once the housing market recovers, they will also be delighted with the great return potential that these foreclosure homes offer.